Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Posts Tagged ‘Big 4

Third sentencing: PCAOB staffer who leaked inspection lists to KPMG earns 9 months in prison.

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Jeffrey Wada, the former PCAOB staff person who leaked inspection lists to KPMG, was sentenced to nine months in jail plus three years supervised release.  He was convicted of wire fraud in March 2019.

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Written by Jim Ulvog

October 11, 2019, 16:01 pm at 4:01 pm

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Last person in KPMG inspection leak fiasco enters guilty plea

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The last person to face justice in KPMG’s fiasco of gaining illegal access to PCAOB inspection lists entered a guilty plea a few weeks before his scheduled trial.

David Britt entered a guilty plea on 10/3/19 to one count conspiracy to commit wire fraud. His trial would have otherwise started on 10/21/19.

Sentencing is scheduled for 5/8/20.

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Written by Jim Ulvog

October 4, 2019, 9:15 am at 9:15 am

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Second sentencing in KPMG fiasco of getting list of PCAOB inspection list.

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The most senior level former partner charged in the KPMG “steal the exam” fiasco was sentenced to one year and one day in prison for his role in the leak of PCAOB inspection targets. David Middendorf received a fraction of the 37-46 months requested by US Attorney office and 46-57 months recommended by the United States Probation Office.

Some articles to provide lots more info:

Wall Street Journal – Jean Eaglesham – 9-11-19 – Ex-KPMG Partner Sentenced to a Year and a Day in ‘Steal the Exam’ Scandal

Crain’s New York Business – Aaron Elstein – 9/11/19 – Former top KPMG partner gets a year and a day in prison – Article points out the sentence of a year plus one day means Mr. Middendorf is eligible for good behavior credit.

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Written by Jim Ulvog

September 12, 2019, 6:00 am at 6:00 am

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More details on first sentencing in KPMG/PCAOB fiasco as second sentencing is expected today.

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The second sentencing in the fiasco of leaking PCAOB’s inspection list to KPMG is set for 10:30 today, 9/11/19.

Background on Mr. Middendorf sentencing

David Middendorf will face federal judge J. Paul Oetken to learn how long he will be in federal housing. Judge Oetken is handling all of the trials in this case.

On 7/26/19 Mr. Middendorf submitted his arguments on sentencing (docket #379). If you have lots of time on your hand, you can also read the 25 attachments.

The US Attorney filing had this comment (#394), which I’ll quote:

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Written by Jim Ulvog

September 11, 2019, 7:32 am at 7:32 am

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First sentencing for leak of PCAOB inspection list to KPMG

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A former Inspections Leader at PCAOB who went to work for KPMG as an Executive Director and was involved in leaking lists of audits scheduled for inspection was sentenced today.

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Written by Jim Ulvog

August 9, 2019, 17:35 pm at 5:35 pm

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Two articles provide more info on SEC sanctions against KPMG for ‘stealing the exam’ and CPE course cheating fiascos.

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For more discussion on the dual fiascos of the now-former-senior KPMG partners getting the PCAOB inspection list and altering workpapers along with cheating on continuing education classes, check out these two articles:

 

Francine McKenna at MarketWatch on 6/18/19 The KPMG cheating scanal was much more widespread that originally thought.

Article provides a good summary of the settlement.

Try this on for a word picture, which I’m expanding from Francine’s description in the article:

Getting a $50M fine from stealing the inspection list (and then altering workpapers) is the powerful right punch that everyone was expecting. The test cheating part is a staggering left hook that nobody saw coming.

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Written by Jim Ulvog

June 20, 2019, 7:57 am at 7:57 am

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KPMG agrees to $50 million fine from SEC. The details are really bad.

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Oh, remember that post about the SEC considering a $50M fine against KPMG?  Initial report suggested it was for gaining access to the list of engagements which were going to be inspected by PCAOB.

It is much worse.

The firm is fined for altering workpapers based on the inspection list. In addition, there was a lot of cheating on the tests for CPE courses, including a class required by the SEC.

The SEC says KPMG has agreed to settle and pay $50M.

If you want to read the gory details for yourself, you can do so:

This is for real. Seriously.

By the time you finish reading this post or other reports on the SEC’s action, you may be wondering whether there needs to be an assertion the source of information for this post was neither The Onion nor Babylon Bee.

Reports of setting your own passing score for an ethics test could make you wonder if it is very early April. “Cooperate and graduate” exchanges of test answers with the engagement partner and your audit team makes one wonder whether we have entered some sort of alternate reality.

You may want to glance at the linked documents and verify for yourself they are for real.

I assure you the above documents are from the SEC.gov website.

SEC action

In part II of the administrative action/cease & desist order, KPMG admits the facts described in part III.

Here are some highlights of part III.

First cause of action

The first cause of action by the SEC is the firm obtained the list of engagements which were going to be inspected by PCAOB and then altered workpapers which had not yet hit the lock-down date.

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Written by Jim Ulvog

June 17, 2019, 9:22 am at 9:22 am

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